When someone offers you free money, it’s usually too good to be true. That’s the message the Internal Revenue Service (IRS) is sending in a new warning about third-party vendors operating what are essentially ERC mills.
The Employee Retention Credit was created nearly three years ago as part of a larger COVID-19 relief package to help employers struggling with lost revenue. The credit allows eligible businesses to receive substantial tax credits. And while many industries and employers qualify, it doesn’t apply to all businesses and circumstances. In fact, in a report issued this past August by the Treasury Inspector General for Tax Administration, the IRS had identified more than 11,000 suspicious federal returns that claimed more than $2 trillion in credits as of March 10, 2022.
These third-party vendors charge high contingency fees upfront and file claims that are either unqualified or qualified for a much smaller credit. They neglect to fully explain the complexity of the program to clients.
The IRS has announced it will use a portion of its recently appropriated $85 million enforcement funding to train agents to conduct ERC audits. Unqualified or underqualified claims will most likely result in drastic reductions to the improperly obtained credits, which can cost the filer significantly.
So, before you fall for any free money claims, make sure you do your research to choose a reputable and qualified advisor. A little work upfront can save you a lot of headaches and heartache down the road. At Miami CFO, we have helped numerous business owners collect millions of dollars the right way, and we can do the same for you.
Use this link to schedule a meeting: https://calendly.com/miami-cfo.
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